Is Rental Car Reimbursement Worth It?

We all know that you need car insurance for any vehicle you own and drive. However, rental cars have their own world of insurance, and it’s not always readily obvious which kind you should opt for. Oftentimes, one of the available options is called rental car reimbursement.

Here’s why reimbursement differs from standard coverage, and whether it’s worth it—or if you should stick to regular insurance.

What is rental car reimbursement?

For most rental car companies, reimbursement is an option for your insurance plan. This means you can add it on to your existing plan or any new plan that you choose.

This add-on gets its name earnestly. It reimburses you for any travel-related expenses while your owned vehicle is out of commission, like public transportation or car rental fees.

Your existing auto insurance company likely offers a rental car reimbursement option for a small fee. For example, State Farm offers rental car reimbursement plans on an annual basis. They don’t list the precise quote, but it’s often less than the cost of a rental car for a single day. State Farm also maintains limitations on reimbursement (either for “each day” or “each loss”). Geico also has daily and per-claim limits. They also share that gas, mileage, additional coverage or any security deposit required by the rental car company are not reimbursed.

How rental car reimbursement differs from coverage

Sometimes, rental car reimbursement may be referred to interchangeably with rental car coverage. However, it’s important to note that the two are not the same.

Rental car reimbursement is an optional add-on to your existing car insurance. You don’t get it from the rental car company, but your insurance company. That way, you don’t have to worry about getting around if your car is in the shop or if you’re in another transportation pickle. It only applies to covered claims, which means you have to report the incident that got your car in the shop to your insurance company and have it covered.

On the other hand, rental car coverage is a plan that you get from the rental car company itself. You basically pay them for temporary insurance in case the rental vehicle incurs damages or other liability ensues while you’re driving it.

Reimbursement complements coverage

While the two are different, reimbursement and coverage work very well together. If you expect to need a rental car at least once a year, it will end up being worth it. Given that reimbursement plans tend to be so affordable, you could have a rental car for just one day and pretty much break even. Based on your reimbursement plan you could save hundreds of dollars for a single incident if your rental car period goes beyond a single day.

Ultimately, rental car reimbursement is a good option for folks who rely on their vehicles to get through their daily lives. Paying out the wazoo for an unexpected rental car (in addition to dealing with repair costs for your own vehicle) is enough to make anyone sweat. An extra layer of padded protection can make a world of difference. If anything, it can make you breathe easier on an otherwise stressful day.

Renting a car? Check your coverage so you’re in the know

Even if you know you have car insurance, you may not realize the ins and outs of your plan. Check back with your plan (or your agent, if you can’t find the plan itself) to see if you have rental car reimbursement added as an option. If you’re renting in the near future, it’s smart to have it set up. And remember, if your car is in the shop and you decide to take public transportation instead of rent, the right plan can reimburse those costs as well.